Colgate-Palmolive (India): Smiles coming back; double-digit sales/OP growth on the horizon

研报英文原文证据摘录

Colgate-Palmolive (India): Smiles coming back; double-digit sales/OP growth on the horizon

git sales growth in coming quarters.

Input cost pressure to moderate GPM in 2Q27, while step-up in ad spends to limit OPM

GPM expanded 105bp y-y to 70% in 1Q, as lower-priced inventory, premiumization-led favourable mix

(premium saliency increased by 35% over the past two years), partial benefits from pricing, and savings

from its Funding the Growth program helped protect margins from input cost inflation. However, the

reinvestment of GPM improvement into brand building (ad spends +34% y-y) along with the impact of

inverted duty structure under GST led to an OPM contraction of 145bp y-y to 30.1%, in line with our Source: LSEG, Nomura

forecast but a tad below Bloomberg consensus estimate of 30.7%. This led to EBITDA growth of 6.7% y-y,

above our estimate/Bloomberg consensus estimates of 3.1%/6.2% y-y and returned to mid-single-digit+ Research Analysts

growth after seven quarters of impacted performance. Input cost inflation is likely to cause a slight

India Consumer Relatedmoderation in GPM in 2Q, while a likely rise in A&P spends will limit OPM. However, the full impact of

Mihir P. Shah - NFASLmid-single-digit pricing growth is likely to ease some pressure and drive double-digit EBITDA

mihir.shah1@nomura.com

growth from 2Q, in our view. +91 22 403 74232

Maintain Buy with a higher TP of INR2,550; CLGT trades at 37x Mar-28F EPS Riya Patni - NFASL

We expect sales and EBITDA growth to recover to double-digits from 2Q, which will be supportive riya.patni@nomura.com

for the stock. We value CLGT at a P/E of 42x (in line with 10-year average, unchanged [Fig.19]) on +91 22 405 33473

Jun-28F EPS (Mar-28F earlier), and arrive at a TP of INR2,550 (vs INR2,500 earlier). We forecast a